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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Underperforming carbon capture projects considerably outnumber successful projects globally, with both the technology and regulatory framework found wanting, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).
IEEFA’s The Carbon Capture Crux – Lessons Learned report studies 13 large-scale carbon capture and storage (CCS) and carbon capture utilisation and storage (CCUS) projects in the natural gas, industrial and power sectors in terms of their history, economics and performance. These projects account for around 55% of the total current operational capacity worldwide, says IEEFA in a report which notes the proportion of current carbon capture projects that are used to enhance oil recovery.
Author Bruce Robertson says seven of the 13 projects underperformed, two failed and one was mothballed. ‘CCS technology has been going for 50 years and many projects have failed and continued to fail, with only a handful working. Many international bodies and national governments are relying on carbon capture in the fossil fuel sector to get to net zero, and it simply won’t work. Although some indication is it might have a role to play in hard-to-abate sectors such as cement, fertilisers and steel, overall results indicate a financial, technical and emissions-reduction framework that continues to overstate and underperform,’ he states.
IEEFA claims that Shute Creek in the US underperformed its carbon capture capacity by around 36% over its lifetime, Boundary Dam in Canada by about 50%, and the Gorgon project off the coast of Western Australia by about 50% over its first five-year period.
‘The two most successful projects are in the gas processing sector – Sleipner and Snøhvit in Norway. This is mostly due to the country’s unique regulatory environment for oil and gas companies,’ says co-author Milad Mousavian. ‘Governments globally are looking for quick solutions to the current energy and ongoing climate crisis, but unwittingly latching onto CCS as a fix is problematic.’
The Australian government recently approved two new offshore greenhouse gas storage areas, stating that CCS ‘has a vital role to play to help Australia meet its net zero targets'. However, carbon capture technology is neither new or a climate solution, Robertson notes. ‘As our report shows, CCS has been around for decades, mostly serving the oil industry through enhanced oil recovery (EOR). Around 80–90% of all captured carbon in the gas sector is used for EOR, which itself leads to more CO2 emissions,’ he adds.
About three-quarters of the CO2 captured annually by multi-billion-dollar CCUS facilities, roughly 28mn tonnes out of 39mn tonnes total capture capacity globally, is reinjected and sequestered in oil fields to push more oil out of the ground, the report says. ‘In addition to being wildly unrealistic as a climate solution, based on historical trajectories, much of this captured carbon will be used for enhanced oil recovery,’ notes Robertson.
History shows CCS projects have major financial and technological risks, says the report. Close to 90% of proposed CCS capacity in the power sector has failed at implementation stage or was suspended early – including Petra Nova and the Kemper coal gasification power plant in the US, it adds. Furthermore, most projects have failed to operate at their theoretically designed capturing rates, and as a result, the 90% emission reduction target generally claimed by the industry has been unreachable in practice, suggests IEEFA.
Finding suitable storage sites and keeping it there is also a major challenge – the trapped CO2 underground needs monitoring for centuries to ensure it does not come back to the atmosphere. The report identifies interim considerations for CCS projects if no alternative solutions to emissions reduction are found:
- Safe storage locations must be identified, and a long-term monitoring plan and compensation mechanism in case of failure developed.
- The CCS project must not promote EOR.
- To avoid project liability being handed over to taxpayers, as is currently the situation with Gorgon, large oil and gas companies mainly benefiting from CCS at their gas developments must be liable for any failure/leakage and monitoring costs of CCS projects, specifically if they get subsidies, grants and tax credits for capturing the carbon.
- It must not be used by governments to greenlight or extend the life of any type of fossil fuel asset as a climate solution.
Robertson says more research could be done on CCS applications in industries where emissions are hard to abate, such as cement, as an interim partial solution to meeting net zero targets. ‘As a solution to tackling catastrophic rising emissions in its current framework however, CCS is not a climate solution,’ he concludes.